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Old 2022-05-24, 02:59   #5
Dr Sardonicus
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Feb 2017

5,903 Posts

Ah, yes, the TARP program. It's all coming back to me now. The Bush Admin loaned GM something over ten billion, the Obama Admin "loaned" a lot more, much of it in the form of buying GM stock. So the government was at the table because it was a creditor.

GM paid back the government loans with money it took from other TARP accounts. Treasury sold off the GM stock for a lot less than it had bought it for. The main political consideration appears to have been, getting this off the Admin's plate as quickly as possible.

AFAICT it was bankruptcy rules that dictated which dealers had to be closed, not the political leanings of the dealer managers. And the Admin did not make those calls. Chapter 11 rules allow the company or a bankruptcy judge - not creditors - to nullify existing contracts.

NADA knew that at least 900 dealers would be closed without a bankruptcy, but that hundreds more than that would be closed with a bankruptcy filing. Which is why they fought against a bankruptcy filing. After the filing, NADA did manage to gain some flexibility for dealers - the possibility of selling different models, or arbitration. These remedies were often not applied, or did not work in the dealwers' favor, however.

With Treasury a major stockholder, right-wing pundits clamored for a boycott of "Government Motors."

I'm not sure what would have happened without the government bailout. Perhaps GM would have gone to Chapter 7 - liquidation.

I am brought to mind of the government bailout, circa 1971, of a major military contractor, Lockheed. It was something like 250 million dollars in government loans. I remember a cartoon of the time showing some of the Lockheed "suits" in a room, gleefully counting the money. A doorkeeper to the room was motioning them to hide it. A man was at the door asking to see the Board of Directors because, "It seems that, as a taxpayer, I am a majority stockholder..."

Purely coincidentally, Lockheed had been involved in a bribery scandal with foreign governments, notably Japan, from around 1950 to 1970. The Japanese were shocked - shocked! - that their folks involved in buying aircraft had taken bribes from a foreign company!
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